Perficient (PRFT) stock has soared from 5.30 in May to 9.60 on Jan. 11. The reason: a sales surge. The company helps 425 enterprises adapt their systems to the Web using IBM's (IBM) WebSphere software. Acquisitions and growth drove up revenues in 2005 by 65%, to $100 million. By yearend 2006, says CEO Jack McDonald, sales could hit $200 million. Collin Gills of Canaccord Adams, who rates the stock a buy, with a 12-month target of 12, says Perficient is benefiting from the jump in corporate tech outlays. That, plus acquisitions, will drive up profits and sales, he says. Perficient is in talks with several companies that have an aggregate $250 million in annual revenues. Although Perficient trades at a high price-earnings ratio of 24 times Gills's 2006 estimate of 41 cents a share (vs. an estimated 30 cents in 2005 and 19 cents in 2004), the stock is still undervalued relative to its peers, based on the company's projected earnings-growth rates in 2006 and 2007. Gills figures Perficient will earn 49 cents a share in 2007. Morton Meyerson, ex-CEO of Electronic Data Systems and the biggest holder in Perficient, with 12%, says Perficient is a long-term growth play "much like Dell (DELL)." Meyerson is impressed with its "strong management, which helped the company survive the tech crash."
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial